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Do U.S. Automakers See the Writing on the Wall?

March 4, 2009

E.J. Manning

Auditors Deloitte and Touche have announced the beginning of the death rattle of General Motors as car sales continue to plunge nationwide. There is substantial doubt as to whether GM will remain financially viable. Truthfully, U.S. automakers GM and Chrysler haven’t been financially viable since the economic downturn last year. After a bailout last December, General Motors is facing the music once again because of its huge debt and infrastructure of multiple car brands coupled with global corporate exposure. The future is bleak because future viability counts on an economic recovery that nobody can accurately predict, much less guess. The idea of future viability is as much speculation as any venture on Wall Street.

auto-industry-falloffThe ugly truth is that the failure of General Motors would portend a great blow to an economic recovery in the United States. The greater truth of General Motors on life support is the magnification of economic ripples in the industry already sounding through the U.S. economy. The U.S. economy now finds itself in an economic quagmire that it failed to solve last year with U.S. automakers. Does President Obama and America see the writing on the wall or is General Motors too big to fail?

General Motors has known about financial issues for some time and has had plenty of time to formulate a restructuring plan, but has failed to do so. Once again the fear card is being played regarding the possibility of bankruptcy and the ability to secure financing. When GM became a bank holding company, didn’t this solve most of the issues facing company where money was concerned? Apparently not.

The media announces that GM needs another $9 billion as well as executing a restructuring plan that emphasizes fewer and better products in the face of a global sales slump. GM is trying to sell that fact that it can return to profitability in 2 years. However, everyone know that this is a huge gamble that requires a healthy dose of optimism regarding the economy, notably the ability of consumers to buy cars once again on a significant level.

Clearly, the American consumer needs a ‘bailout’ on some level in a worse way than any huge industrial giant. So far the nation’s citizens are seeing a difference of $8 a week or so in their pay as a stimulus coupled with a variety of social engineering discounts through the tax system that we must wait for. Social engineering through the IRS isn’t stimulus or assistance on any real level. Americans need some real motivation to invest in themselves and their own business ideas without heavy taxation penalties. However, that would reverse the trend of control that government wants. Unfortunately, big government can’t see clear to relaxing their rules, much less their monitoring of the little guy without feeling that they are being taken advantage of somehow. The noose around the neck of the little guy remains firmly planted.

So far, economic recovery is all up to government and Big Business.  Most American citizens can’t afford to participate. ~ E. Manning

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